What investors should look out for in 2018(World News UK)

7 december 2017 12:55:10

One of the big ironies in financial markets is that very expensive assets often exhibit very low volatility. This creates the impression that risks are low in spite of prices being high. The US stock market today is a case in point. Since Donald Trump was elected in 2016, the market has not experienced a down month. Returns have been terrific and volatility has been very low. So low, in fact, that in the last year the S&P 500 has produced a spectacularly high Sharpe ratio[1] of approximately 4.5! To put this into context, a good long-term Sharpe ratio would generally be something that falls between 0.5 and 1.0 on an annualised basis. Indeed, the average for the US market between 1928 and...